The fair-value fall-out. By Rob Lewis

Growing liquidity problems, and a recent re-think at the IASB, suggest the tide seems set to turn for fair value and mark-to-market accounting. Many of the financial institutions and accounting firms that championed its cause in the growth period are exhibiting waning enthusiasm now that assets cannot be easily divested.

In the US, American Insurance Group (AIG) was the first public company to come out and criticise fair value after a record quarterly loss of $11 billion following a mortgage write-down.

Those opposing fair value in these circumstances do not seem to articulate an alternative for the likes of banks.

Don't forget that the "cost" model is lower of cost and net realisable value. In the current situation, the banks hold many instruments below their cost, and so would end up with similar write downs as under a fair value model.